ML18088A909

Turkey Units 3 and 4 - Supplemental Brief of Florida Cities

ML18088A909
Person / Time
Site:	Saint Lucie, Turkey Point
Issue date:	06/29/1977
From:	Giacalone D, Jablon R Florida Cities, Spiegel & McDiarmid
To:	Atomic Safety and Licensing Board Panel
References
Download: ML18088A909 (25)

Text

I UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFE Y A?'ID LICENSING APPEAL BOARD Florida Power & Light Company )

(St. Lucie Plant, Unit No. 1) ) Docket No. '50-335A

)

Florida Power & Light Company '

(Turkey Point Plant, Units Nos. ) Docket Nos. 50-250A 3 and 4) ) 50-251A SUPPLEMENTAL BRIEF OF FLORIDA I

CITIES Robert, A. Jablon David A. Giacalone Attorneys for 'the Fort Pierce Utilities Authority of the City of Fort Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake Worth Utilities Authority, the Utilities Commission of the City of New Smyrna Beach, the Orlando Utilities Commission, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Daytona Beach, Fort Meade, Key West, Mount Dora, Newberry, Quincy, St. Cloud and Tallahassee, Florida and the Florida Municipal'Utilities Association.

June 29, 1977 Law Offices of:

Spiegel & McDiarmid 2600'irginia Avenue, N.W.

Washington, D.C. 20037 (corrected copy per Errata Sheet of June 30, 1977}

202-333-4500

TABLE OF AUTHORITIES COURT CASES PAGE Cammarano v. United States, 358 U.S. 14 498 (1959)

I Cities of Statesville v. AEC, 441 F.2d 962 passim (D.C. Ca.r. 1969 Conwa Cor . v. FPC, 510 F.2d 1264 ( H".C.. Cir..1975),

affirmed, 426 U.S. 271 (1976)

FCC v. WOKO, 329 U.S. 223 (1946) 20 FPC v. Idaho Power Co., 344 U.S. 17 (1952) 20 Gainesville Utilities Department v. Florida Power Cor oration, 402 U.S. 515 (1971) 16 Gulf States Utilities Co. v. FPC, 411 U.S.

747 (1973) 20 Idaho v. FPC, 346 F.2d 956 (9th Cir. 1965) 20 Mansfield Journal Co. v. FCC, 180 F.2d 28 D.C.. Car. 950 10 Massachusetts Mutual Life I'nsurance Co. v.

United States, 288 U.S. 269 (1933) 14 Mercoid Cor . v. Mid-Continent Co., 320 U.S.

661 (1944)

Morton Salt Co. v. Sun i er, 314 U.S. 488 (1942) 19 Muniz v. Hof I

fman, 422 U. S. 452 (1974)

National Broadcasting Com an v. United States, 319 U.S. 190 (1943) 10 Office of Communications of the United Church of Christ v. FCC, 425 F. 2d 543 (D.C. Cir. 1969) 20'6 Otter Tail Power Co. v. United St'ates, 410

= U S -366 (1973)

Ricci v. Chica o Mercantile Exchan e, 409 U.S.

289 (1973)

Southern Steamshi Co. v. NLRB, 316 U.S. 31 (1942) 20

NRC CASES PAGE Du uesne Li ht Com an , ALAB-208, 7 AEC 959 (1974)

Florida Power and Li ht Com an (St. Lucie Plant, Unit No. 2), Docket No. 50-389A, slip opinion issued April 5, 1977 Florida Power and Li ht Com an , Docket No.

P-636-A Houston Li htin and Power Co. (South Texas Project, Units 1 and 2), ALAB-381 (March 18, 1977) passim Houston Li htin and Power Co.(South Texas Project, Units 1 and 2), Docket Nos. 50-498A and 50-499A, CLX passim 13, 5 NRC (June 15, 1977)

Toledo Edison Com an -(Davis-Besse Nuclear Power Station, Unit 1), ALAB-323, 3 NRC 331 (1976)

STATUTES (no page references)

Atomic Ener Act of 1954 Section 1, 42 USC 2011 Section 3, 42 USC 2013 Section 103, 42 USC.2133 Section 104, 42 USC 2134 Section 105, 42 USC 2135 Section 161, 42 USC 2201 Section 183, 42 USC 2233 Section 186, 42 USC,2236 Federal Communication Act Section 311, 47 USC (amended 1960)

REPORTS WAGE Heerin s Before the Joint Committee on Atomic Enercee, 91st Congress, 1st sess., "Prelicensing Antitrust Review of Nuclear Power Plants, Part 14 I, Appendix 5

This Supplemental Brief is filed on behalf of Florida Cities 1/

pursuant to the Appeal Board's Orders of June 16, 1977 and June 21, 1977.

In light of the Appeal Board's order in Houston Li htin and Power Com an (South Texas Project, Units 1 and 2); ALAB-381 (March 18, 1977), there are two questions for decision: (1) whether the Trial Board convened in these dockets correctly

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determined that it was foreclosed from considering Florida review request on its merits due to lack of internally Cities'ntitrust delegated authority and (2) the impact of the Commission's South Texas decision. Houston Li htin and Power Comnan (South Texas Project, Units 1 and 2), Docket Nos. 50-498A and 50-499A, CLI-77-13,'5 NRC 'June .15, 1977)..

Florida Cities disagree with some of the statements in the Commission's South Texas decision. 2/ To the extent the Commission holds that once a construction permit has been issued, changed circumstances must be shown to obtain further antitrust review or that such further review is limited to consideration of changed circumstances, Florida Cities emphatically disagree.

They further disagree with the Commission's analysis limiting the plain words of 5186 of the Atomic Energy Act, 42 U.S.C. 52236, and the Statesville decision, Cities of Statesville v. AEC, 441 F.2d 962,(D.C. Cir., 1969), and with any -inferences that .the II e 1/ "Florida Cities" consist of the Fort Pierce Utilities Authority of the City of Fort Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake Worth Utilities Authority, the Utilities Commission of the City of New Smyrna Beach, the Orlando Utilities Commission, the Sebring Utilities Commission, and the Cities of Alachua, Bartow, Daytona Beach, Fort Meade, Key West, Mount Dora, Newberry, Quincy, St. Cloud and Tallahassee, Florida and the Florida Municipal Utilities Association.

Houston Li htin and Power Com an (South Texas Project, Units Q2 No. 1 & 2, Docket Nos. 50-498A, 50-499A, CLI-77-13, 5 NRC (June 15, 1977) .

Commission can limit or legally avoid its responsibilities to assure that licensees act compatibly with the antitrust laws. However, for purposes of this pleading Cities assume the Commission's decision's total correctness.

Zn view of the exhaustive pleadings filed below on the merits, Florida Cities merely refer to factors on the merits that may be deemed relevant in light. of the Commission's S'outh Texas decision.

As is stated in the "Notice of Appeal and Appellant Brief of Florida Cities," filed April 29, 1977, pages 2-3, the Licensing Board dismissed Florida Cities'etition on procedural grounds for want of jurisdiction. 1/

Therefore, should the Appeal Board reach the merits Florida Cities rely upon the record below. 2/

I. THE TRIAL BOARD ERRED IN DETERMINING THAT IT DOES NOT HAVE AUTHORXTY TO RULE; WHILE THE COMMISSION'S HOUSTON LIGHTING AND POWER COMPANY DECISION DOES NOT DETERMINE THE MATTERF IT CREATES NO BAR TO THE AUTHORITY OF THE TRIAL BOARD.

As Florida Cities read the Commission's decision in Houston Li htin and Power Com an, ~su ra, it does not purport to determine the internal jurisdiction within the Commission over Florida The fact that the Commission declined to review this Board's Cities'etition.

1/ However, in the related St. Lucie Plant,,-Unit No. 2, Docket 50-389A,. Florida Power & Li ht Com an , Docket No. 50-389A, et al.

(April 5, 1977, p. 29 of slip op.), the. Licensing Board found grounds for granting intervention. See also Fl'orida Power 6 Li ht,

~Com an, Docket No. P-636-A, where Florida Cities'ight to a hearing (for a newly filed construction permit application) is uncontested.

2/ Florida Cities also respectfully refer the Board to their "Brief Amicus Curiae of Florida Cities," filed with the Commission in the South Texas dockets, 50-498A 'et al. (May ll, 1977), which they request be incorporated by reference.

decision in ALAB-381 might otherwise be taken as limiting the Licensing Board's authority 1/; however, the Commission states:

"ln declining to review ALAB-381, of course, we are not to be taken as hav'ng agreed with everything that the Appeal Board had said in that opinion." Commission Decision, p. 8.

A reading of this cautionary statement in conjunction with its review of the underlying merits strongly suggests the Trial Board's authority to rule on the matter. 2/

On page 26 of its South Texas decision, the Commission explicitly reserves "the issue pending" in these dockets. The Commission denied Florida Cities'Motion for Commission Clarifi-cation of Procedures" (March 29, 1977), .3/ noting (p. 3), "such an appeal is pending before the Appeal Board." Memorandum and Order (June 22, 1977). 4/'rom these actions Florida Cities can conclude only that to the extent the Commission focused upon the Ql by Assuming this is the case, I, ZZ and l:V of the Notice it still leaves of Appeal open the issues raised and Appellate Brief of Florida Cities."

2/ indeed, the Commission suggests that there is doubt the division of responsibilities and that rulemaking may be on appropriate.

South Texas, ~su ra,' pp. 26-27. Non-action until such rulemaking

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3/ See also "Notion for Leave to Respond and Response 'of Florida

'ities to Florida Power Cities'otion

&- Light Company and Stafz Answers to Florida for Commission Clarification of Procedures" (April 18, 1977) .

Q4 The matter has also been submitted by Florida Cities to the Director of Reactor Regulation for ruling.

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procedural questions here, it determined to allow for the normal functioning of Commission processes with subsequent opportunity for Commission review. There is a desirability when serious problems involving important public interest matters are presented to governmental agencies having jurisdiction that. every effort should be made to resolve them.

The above factors are reinforced by Florida Cities'eading of the Commission decision on its merits. Taken in its entirety, in South Texas the Commission rejects Florida Cities'nd others'laims that the Commission has a general, continuing responsibility to assure that its licensees do not use its licenses contrary to antitrust law and policy. Thus, the Commission appears to apply a significant changed circumstances test to post .construction permit antitrust hearings. As has been stated, the Commission leaves open the question of its authority "where 'significant changes'ccur after an operating license is issued," Decision, p. 26, but one can imply that,. assuming there,.is any authority, the test would be similar.

On the other hand, the Commission recognizes that 5186 has some antitrust applicability. Zt cites "post-licensing enforce-ment proceedings in the event of violation of a specific antitrust licensing condition",(as .is directly recognized by statute), and

'I also lists falsification of antitrust review -information, obtaining.

a license by fraud or concealment and license modifications as probably also being covered. Decision, pp. 12-13, 26.

The underlying key to the Commission's decision appears to be its judgment, that 5105 provides for a specific antitrust review authority that should not be subordinated to more general review sections. E.g., Decision, pp. 14-15; p. 12. The Commission

appears to also find unfairness to the applicant or investors in causing them to "be required to run the antitrust review gauntlet twice." Decision, p. 31. Thus, the Commission concludes that where there has been antitrust review at the construction permit phase, subsequent review should be limited.

On the other hand, the Commission's precise holding in South Texas, after the construction permit phase, was that there should be allowance for procedures to initiate subsequent review. In reaching this determination, the Commission was well aware that there had been no previous antitrust hearing. Indeed, it appears to attempt to distinguish some of its previous discussion, stating at p. 31:

.".Although these judicially developed doctrines fres

~udicata laches're not fully applicahle in administrative proceedings,

'ad udicato articularl where, as here, there was no roceedin at the construction nermit stage, the considerations of fairness to parties and conservation of resources embodied in them are relevant here [in justifying antitrust review].." (Emphasis supplied).

As in South Texas, in this case there has been no prior antitrust hearing; in fact, .there has never even been an antitrust review of the plants in this case. Therefore, for reasons discussed in the next. section, the factors militating against the proverbial bites at the. apple are not present.

two Thus, Plorida Cities submit that the specific result in the South Texas case directly supports Plorida Cities'istinction of s s

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the South Texas Appeal Board decision that antitrust review procedures should not be short-circuited for 5104 licenses where there was

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never antitrust consideration. Moreover, if there is to be some antitrust consideration of the St. Lucie Unit No. 2 nuclear plant, s

especially since relief may encompass these

would dictate granting review in al1 dockets. 1/

II. THE TRIAL BOARD HAD RESPONSIBILITY TO GRANT ANTITRUST REVIEW IN THESF DOCKZTS.

This case is before the Appeal Board on procedural grounds.

As Florida Cities stated in the preceding section, in South Texas the Commission balances two polarized principles. First, it finds that 5186, 42 U.S.C. 52236, should not engulf the more specific antitrust review provisions of 5105, 42 U.S.C. 52135, and that licensees should not be subject to continuing antitrust review.

On the other hand, it recognizes that 5186 cannot be deemed inapplicable to antitrust. matters.. 2/ In attempting to reconcile the polarizing principles, the Commission focused on the requirement that for there to be antitrust review after the construction permit review, significant changes justifying such second review must be demonstrated; although this limitation was qualified bythe~corre sp%c tH ~

Ql Florida Cities have claimed that the, antitrust abuses of Florida Power & Light Company are system-wide (i.e., that Florida Power & Light company is using the nuclear energy generated from its nuclear licensed units in combination--operating .and planned--to limit their competitive opportunities) . On this basis, Florida Cities have claimed that a license condition of St.. Lucie Unit No. 2 (or the South Dade unit at issue in Docket No. P-636-A, but suspended) should be system-vide. Duauesne Li ht Company (Beaver Valley. Power Station, Unz.t No. 2), ALAB-208, 7 AEC 959, 969 (1974) . However, absent granting intervention in these dockets, Florida Power & Light Company might argue that the ability of the Commission to take corrective action was limited either directly or by inference. Therefore, Florida Cities have sought relief by a conditioning of, the Turkey Point and St. Lucie 1 units directly.

Elsewhere, Florida Power & Light Company has suggested that Florida Cities'ppropriate remedy is to file a District Court antitrust action oi an action before the Federal Power Commission or, indeed, anywhere but here. Florida Ci'ties perceive a number of difficulties with this position, including that other fora would most likely take the position that the Nuclear Regulatory Commission has primary jurisdiction over antitrust claims centering around the use of licensed nuclear units (see nicci v. Chica o Mercantile Exchan e, 409 U.s. 299 (1973)), and that FF&L woulc undoubtedly seek to use any decision here in its favor as determinative of other actions.

Moreover, the statutory responsibility lies here. It runs contrary to responsible governmental decision-mating or judicial procedure 2/ Footnote on following page.

recognition that:

"[T]he antitrust implications of a 'significant

.indeed arise from its relationship to unchanged change'ay features of the proposal." Decision, p. 32.

The Commission's determination is explicitly referenced to equitable principles. Decision, pp. 31-32. The reverse. side of the coin is where there has been no antitrust review in the first place, considerations weigh in favor of antitrust review.

Thus, the Commission determines that for Section. 103 licenses, equitable considerations limit the justification for a statutory interpretation supporting multiple in-depth antitrust review.

However, the propriety of antitrust review in the present case (based on Sections 1, 3, 104, 161, 186, etc. of the Act) 's supported by the fact that the licenses which Florida Cities wish to have conditioned were issued under Section 104 of the Act, rather than Section 103. 1/

(2/ from preceding page)

Decision, pp. 3-4. There is no basis on the face of Section 186 for differentiating between its grants of. authority relating to policing fraud and concealment or the violation of specific license conditions and its grant relating to the general enforcement of the provisions. of the Act. Thus, the Commission rightly leaves open the possibility that Section 186 may have "limited application" (related to the "significant changes" restriction of Section 105(c) (2) ) to the issues present'ed in this proceeding..Decision at 26.

It should be noted that holding an antitrust review after the issuance of the operating license..will not subvert the main purposes behind Section 105(c) (2) . The "Grandfather Clause" case, Toledo Edison Comtian (Davis-Besse Nuclear Power Station,'Unit 1),'ALAB-323/

3 NRC,331, 345 (1976),. makes it clear that Congress hoped to avoid ...

'delay in construction and. operation of nuclear plants in order to best meet the public's need for electric 'power, not primarily for =

the protection of investors. Once a plant is constructed, then, there is no need to restrict the Commission's authority under 5186 to hold needed antitrust hearings, although relief should be fashioned to avoid unnecessary harm to capital markets for financing nuclear units and to take into account reasonable investor reliances.

Because the South Texas license was issued under Section 103, and had thus undergone Section 105(c)(1) antitrust scrutiny, the limited availability and scope of post-construction permi antitrust review posited by the Commission in South Texas might be justified by equitable principles of repose (see Decision at 31) and by the practical consideration that further review would normally not 4e necessary in the absence of changed circumstances. Such notions are inapplicable to Section 104 licenses, because they have not undergone antitrust scrutiny. In addition, Sections 161 and 186 can be seen as tools for assuring that Section 104(b)'s requirement is actually fulfilled that "the Commission shall impose the minimum amount of such regulations and terms of license as will permit the Commission to fulfillits obligations under this chapter." As will be discussed below, significant changes in the licensee's activities and in the economic importance of access to older

'plants since the issuance of the licenses in these "

dockets and since the passage of the 1970 amendments make a re-evaluation of what "minimum" conditions are necessary under the Act warranted at this time.

A holding that post-licensing antitrust review is proper is also consistent with the South Texas decision because the provisions of Section 105 which deal. with activities under NRC licenses cannot be said to be as comprehensive as the pre-licensing pro-

' cedures of..Section 105'(c);,thus', subsections. 105(a) and (b) 'need not be construed as the exclusi:ve remedies

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available .to,the Commission 1

when post,-licensing antitrust claims are made by grievants.

While providing the Commission with some procedure to follow after operating licenses are granted, subsections.105(a) and (b), do not restrict the right to initiate further antitrust review.

Unlike the licenses in South Texas, the licenses here at issue were issued under 5104. Thus, there will be no Commission review,

ever, unless Cities'equest for such review is granted.

Nithout attempting to repeat the argument stated in the preceding subsection, Florida Cities stress that the underpinnings of the Commission's interpretation that such Section 186 does not allow for "continuing" antitrust review is the adequacy of the Section 105 licensing procedures.

The Commission points out the opportunity for prelicensing review at the construction permit stage and, in addition, that NRC review at the operating permit stage is limited to changed circumstances. Citing the legislative history to the 1970 amendments, the 'Commission concludes:

"It is difficult to reconcile these [above-quoted]

statements on the part of the active supporters of prelicensing rev'iew, with 'the view that Congress was considering placing a general antitrust policing authority in the Commission." Decision, pp. 19-20.

The Commission 's expressly stated holding is once an initial, full antitrust review has been performed, only 'significant changes'arrant, reopening." Decision, p. 24..

Of course, the specific holding is that in view of a finding of changed circumstances,. Central Power & Light Company is entitled to operating license stage antitrust review.

It is not contradictory for the Commission to "subordinate" Section 186 to Section 105 in the context of the South Texas

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case while leaving open the. issue of post-licensing, antitrust hearings. 1/ The dispute in',South Texas arose prior 'to the 1/ Section 105(a) of: the Act.specifies that the Commission "may suspend, revoke or take such other action as it may deem necessary with respect to any license issued by the Commission under the provisions of this chapter" when a licensee is found by. a court (footnote continued on next page)

operating license stage of the plant in question. Thus, the Commission felt obliged to follow the "intricate procedure" spelled out in Section 105(c) of the Act. Because Congress had wrought a "carefully perfected compromise" (Decision at 17) in enacting pre-licensing procedures contained in the 1970 Amendments, the Commission held that the more general powers granted in Sections 161 and 186 of the Act were inapplicable during the pre-licensing stage. Thus, its decision to grant anti-trust review was based upon the "subsequent change" test of Section 105 (c) (2) ~

Section 105(c) (2) 's detailed limitation as to when a post,-construction permit hearing may be held need not bar a finding here that antitrust review is available after 'the issuance of an operating license. Subsection (c)(2) deals only with the pre-licensing stage; no other subsection of Section 105 or of the Act purports to limit specifically when antitrust review may (footnote continued from preceding page) to be in violation of the antitrust laws. Court precedent should lead this Appeal Board to reject any contention that Section 105(a) prohibits the Commission from modifying or revoking a license in the absence of such a court finding. Prior to amendments enacted in 1960, Section 311 of the Federal Communication Act stated that the FCC could refuse a license to any person who had been finally adjudged guilty of anticompetitive activity relating to radio

.,communication. When faced with the. contention that this provision

'put"considerations relating to competition outside the, FCC's concern before an applicant or 1'icensee had actually been convicted of. monopoly, the Supreme Court disagreed. It stated:.

"A licensee charged with practices in contravention of

[the public interest] standard cannot continue to hold his license merely because his conduct is also in viola-tion of the anti-trust laws and he has not yet been pro-ceeded against, and convicted."

National Broadcastin Com an v. United States, 319 U.S. 190, 222-23 (1943); and see Mansfield Journal Co. v. FCC, 180 F.2d 28 (D.C. Cir. 1950).

be initiated by the Commission. Therefore, the general powers to enforce the Act's provisions granted in Sections 186 and 161 need not be curtailed. Zn fact, the courts have refused to give a narrow reading to an agency's antitrust mandate in the absence of explicit statutory provisions narrowing that mandate and ex-pressly creating a regulatory gap. Conwav Cora. v. FPC, 510 F.2d 1264, 1272, (D.Q. Cir. 1976), affirmed, 426 U,.S. 271 (1976).

>he l97e amendments came after the original applications

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for the licenses here at issue, so that there never was an antitrust review. This factor distinguishes the Commission's expressed holding on its face that once "initial, full antitrust review" is held, subsequent review is warranted only by'ignificant changes. Decision p. 24. The plants here at issue have the same s

relative status as t2ie Statesville units. Cities of Statesville v.

AEC, 441 F.2d 962 (D.C. Cir., 1969) . Even if the Commission had no antitrust powers under Section 186 and related sections to affect licenses where the 1970 amendment procedures were (or could have been) followed (i. e., Section 103 Licenses), this hardly determines that

'I there can be no authority on the part of the Commission to review the status of Section 104 licenses.

Xt is incontestable that Section 186, 42 U.S.C. $ 2236, explicitly states that: s

',"any license may be'evoked... . ; because of conditions

'evealed by such application .'. . which would warr'ant the Commission to refuse to grant license on an original, appli'cation, or for failure to construct or operate a facility in accordance with the terms... or license or for violation of, or failure to observe any of the terms and provisions of this chapter or any regu-lation of the Commission."

It is further incontestable that Section 186, 42 U.S.C.

52237, allows for subseauent "amendment, revision or modification" of all ViRC licenses, and that Section 183 provides that all licensees shall be subject to continuing cont"ol by the Comm'ssion.

The Congressional declaration of policy, the Congressional findings and the purpose of the chapter set forth in Sections 1-3 of the Atomic Energy Act, 5542 U.S.C. 552011-2013, which control the interpretation of the entire Act, provide for a pro-competitive policy and "a program to encourage widespread participation in the development and utilization of atomic energy for peaceful purposes to the maximum extent consistent with the common defense and security and with the health and safety of the public." Section 3(d).

Against this backdrop, in Statesville the Distric of Columbia Circuit affirmed the Commission's determination that certain licenses proposed for the generation of elec'mic power were for experimental facilities, and therefore did not need antitrust review. However, had the court stopped there, it appears clear that its decision would have been directly contrary to the language and purposes of the Atomic Energy Act.

Therefore, in determining that antitrust review.was not necessary for such non-commercial licenses, the court rightfully felt it had an obligation,to. warn. the .Commission that F

it had a "most serious duty" to evaluate the anticipated antitrust impact of the units once they had demonstrated commercial practicability, concluding:

"Finally, under Section 186(a), 42 U.S.C. f2236(a)

(1964), the Commission has the power to revoke any type of license it has issued when there is a

'violation of, or failure to observe any of the terms and provisions'f the Act. This section invests the Commission with a continuing provides over the activity of its licensees and it

'police'ower with the ability to take remedial action it if a license is being users to restrain trade."

441 F.2d at p. 974.

While, admittedly, the Statesville analysis may be subject to limitation with regard to units where there has already been antitrust review (unlike the Statesville units or the units at issue here), the statement cited above was absolutely essential to a holding that temporarily freed the Commission from necessary review of the anticompetitive impact of potentially commercially operable units subject to its jurisdiction. And, indeed, the Commission s South Texas analysis in many ways is totally consistent with Statesville insofar as both decisions recognize the opportunity for an anti-trust review in conjunction with nuclear licensing. The question review after there had been initial review.

Moreover, with regard to pre-1970 units, the timing is important. The 1970 amendments enunciated a Congressional concern both to assure antitrust review of nuclear units and to allow for their construction. Essentially, Congress simply did not accept the proposition that,'nuclear plants were not .

"commercial". and that they did not need antitrust review.

However, in attempting to assure stricter antitrust control, there is no basis to conclude that Congress immunized the FP&L licenses from whatever subsequent review procedures might

otherwise have been available under the statute. Granted, Congress did not focus upon what subsequent review was in fact available.

, However, there can be no doubt that Congress was aware of Statesville. 1/ Congress did not .choose to "undo" the Court's conclusion as to the relationship of the Act's antitrust policy to Section 186. Such a failure to modify Section 186 so as to negate any authority thereunder to reopen antitrust issues for

'existing licenses should be read as acceptance of the analysis made by the court. See e.g., Cammarano v. United States, 358 U.S. 498, 510 (1959); Massachusetts Mutual Life Znsurance Co. v.

U S I 288 U S

~ ~ ~ 269 ( 1933); Muniz v. Hoffman, 422 U.S. 452 ( 1974)

Florida Cities would .be very much surprised, for example, to find in FP&L's files a legal memorandum written prior to Florida Cities'etition, suggesting that the Company could ignore the clear Statesville language subjecting it to subsequent antitrust review on grounds that the D.C. Circuit s decision was "dictum".

Zn short, the 1970 amendments provided new, strict procedures for nuclear license applications that would be filed in the future, and South Texas determined that this structure of antitrust 1/ See Hearin s Before the Joint Committee on Atomic Ener, 91st Congress, 1st Sess., "Prelicensing Antitrust Review of Nuclear Power Plants", Part ta, I, Appendix 5 at'193-,253; and see Davis-Besse,

~au 3 NRC at 337-38.

review for such licenses precluded going thxough the same process subsequently without clear cause. However, the 1970.

amendments did not retroactively narrow the applicability of Sections 104 and 186 from what they otherwise would have been.

Certainly, thi's cannot, be implied'.

Moreover, even if the'South Tex'as decision by implication applies a changed circumstances test to Section 104 license review under Section 104 or 186, if that test is met, antitrust review must be available. Otherwise, the Commission would write Section 186 from the Act,, insofar as most antitrust jurisdiction is concerned. Ql III. FLORIDA CITIES iHEET THE THRESHOLD SOUTH TEXAS TESTS FOR ORDERING A HEARING.

Assuming that Florida Cities have correctly interpreted the Commission's test, they submit that they have met it.

Without attempting to belabor the point, as is set forth in their petition and affidavit, they, submit as follows:

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1. FP&L has a virtual nuclear monopoly. Its generation from the plants at issue provides a direct means of limiting competition in Florida.

did allow a short, time for petitions to P

1/ The 1970 amendments review. certain facilities,. where intervention. had been previously

'ought. This provision protected the .status of .intervenors such -:-

as those in Statesville., Section 105(c)(3); However, this section would not have protected the petitioners here.. Indeed,, under the state constitution, Florida Cities could not have jointly owned units with Florida Power & Light Company at that time. Moreover, there is no showing that the above-cited limited opportunity was designed to limit Section 186 rights.

2. External, virtually unforeseen events have limited gas and oil availability in Florida or have limited that availability to exceedingly hi:gh prices. These events have made FP&L's nuclear monopoly more valuable.

3. FP&L has sought to take advantage of its nuclear monopoly in rela-tion to unforeseen and cataclysmic. changes in fuels markets by actively seeking to acquire one independent generating system that has been in existence since 1922. The Company has given indica-tions that, if successful, it would seek further expansion.

4.. FP&L has recently refused to agree to nuclear:participation or power pooling consistent with confirmed legal principles. E.g.,

Gainesville Utilities De artment v. Florida Power Cor oration, 402 U.S. 515 (1971); Otter Tail Power Co. v. United States, 410 U.S.

366 (1973)'. Thus, FP&L'ses its economic power stemming from its size and control of facilities to add to the burden of external changes in fuel markets as they affect smaller systems.+1

5. Changes in the Florida State Constitution since the 1970 amendments make cooperative generation ventures possible. However, FP&L has attempted to convince the legislature not to pass municipal authority legislation, j I 4

l/ For example, if FP&L-acquired independent systems, presumably its

.large "base load" ianits(including those at issue here) would operate to

.supply "base load" generation to the customers of the systems'cquired; FP&L would operate the existing generation of such systems to provide intermediate or peaking capacity. Modern pooling arrangements could virtually assure the 'same. result with advantage to the FP&L system. But FP&L refuses, apparently preferring that the customers of the affected systems should vote to sell their systems.

which would allow municipals to finance joint ventures less expensively (or in some cases which would allow such financing at all). Thus, FP&L refuses to make available nuclear capacity, presumably on the grounds that such sales are unnecessary, 1/

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and at the same time, it prevents or limits municipals'bility to obtain economic alternatives. 2/

Xn summary, the alleged factual situation is that the nuclear units involved themselves provide the direct means for carrying out alleged anticompetitive actions by FP&L; the changing fuel situation including loss of gas for generation has made-the impact of FP&L's antimrgetitive 4

conduct with regard to Florida Cities of far greater significance than could have been foreseen; FP&L has been taking advantage of the Cities to force further monopolization; FP&L is currently refusing to deal and acting in other ways that further limit competitive opportunities of Florida Cities and their ratepayers.

These allegations are directly related to the use of the nuclear units. They involve significantly changed circumstances (e.g.,

relating to gas and oil availability and cost for generation, legislation, new anticompetitive actions, including acauisitions, new refusals to deal, including in nuclear power itself). Further, the conduct complained of is central to the concerns of the I ~0 antitrust laws. One can hardly think of more focused and .

'/

FP&L never contested Florida Cities petition in this docket, the St. Lucie docket in 50-389A, or the South Dade dockets, in P-636-A, choosing to argue its case on procedural grounds.

Therefore, it has not had to state the basis for its opposition to individual contentions or to state a pasition concerning them.

2/ Footnote on following page.

-18 immediate. antitrust concerns of the Commission than to avoid acquisitions through misuse of monopoly power, especially where the use of nuclear plants themselves erode competition.

Florida Cities conclude that the granting of their petition here is totally consistent with South .Texas, which allowed for an antitrust review under claims no less compelling I

after the date for the 'construction.,permit. hearing had passed.

Indeed, if there is to be any practical antitrust review under Section 186 and related sections, Florida Cities submit that the (2/ -from preced'ing page)

The affidavit of Osee R. Fagan, Esquire, states:

"Representatives of both .Florida Power and Light (FP&L) and Gulf Power Corporation (Gulf) were vehement in their opposition to FMUA sponsored proposals to allow municipals to jointly finance such projects through creation of joint financing authorities designed to minimize costs and expenses and. improved the saleability of bonds. Each readily ad-mitted that his company did not, want to permit municipals to be able to improve their competitive position in the electric industry."

Since they filed their intervention petition last summer, FP&L has postponed its plans to construct the South Dade nuclear units in Docket No. P-636-A. Thus, unless access is granted to St. Lucie Unit 2 (and the units here at issue) FP&L's ability to use its nuclear monopoly will be "locked-in." Xf given the opportunity to do so, Florida Cities would further contend that since the close of the record, FP&L's actions in allegedly offering cooperation in construction of a central Florida unit, while refusing to commit even in principle on matters of vital concern to Florida Cities, such as the provisions for providing nuclear fuel for the unit, legislation to allow financing, power pooling and transmission,

... constitute further. evidence of anticompetitive purpose and design

'by FP&L.- Florida Cities respectfully request. permission to supplement the record by submitting the correspondence concerning

. such conduct and a supplemental affidavit. Some of the events leading to the ultimate impasse over the Central Florida unit (up until the time of filing the petition) are contained in the supplemental affidavit of Harry C. Luff, Jr.

above allegations provide the direct need. 1/

Finally, Florida Cities point out. that the Houston Li htin and Power Comtian decision did not pass upon all claims made by Florida Cities. One of the "triggers" for invoking 5186, apart from significant changes, would be a "misuse" of a license.

Houston does imply, however, that more is needed than the type of antitrust violation that might routinely be handled by anti-tr'ust enforcement agencies. Here the sales (and refusals to sell) of nuclear energy and resultant possible takeovers are at issue.

The language of 5183, 42 U.S.C. 52233, sets forth that all licenses are subject to "all of the other provisions of this chapter, now and hereafter in effect ~nd to all valid rules and regulations of the Commission." Surely this intended to refer to sections 1-3,

'2 U.S.C. 52011-2033, of the Act and to the specific obligation in 5105(a), 42 U.S.C. 52135(a), that licensees are not relieved from the operation of the antitrust laws. Moreover, the language of 5186, 42 U.S.C. 52236, itself allows for revocation of licenses where a license could not be initially granted.

I While under Houston a petitioner might also have to make a substantial claim that the "misuse" relates to the units and not to more abstract antitrust violations; this does not erase the necessary (and statutory) presumption that NRC licenses will be used lawfully., If a nuclear license is used to further or extend

• ~

lt f

v. Mid-Continent Co., 320 U.S. 661 ..(1944); Morton Salt Co. v..

~Su piqer, 314 U.S. 488 (1942) .

1/ As we have stated in previous pleadings, Florida Cities have never meant to imply that FP&L is not entitled to a full hearing on its claims, whatever they may be. They recognize further that FP&L may be able to put forth considerations involving economics, planning, legitimate reliances, financing or other factors, which may affect the form of relief. However, they strongly contend that just as their allegations (con'. on following page)

The presumption is of course that all licensees -- indeed all citizens -- are bound to obey the law. FCC v. NOc(0, 329 U.S. 223 (1946). 1/

Thus, Florida Cities submit that 5186 is so written to give the Commission an ability to protect the integrity of its own licenses. Assuming that South Texas might limit mere reference to general antitrust violations, where the use of nuclear licenses by FPGL is directly violative of antitrust law, some Commission action is recruired. Under such tests, Florida Cities believe they are entitled to relief. Moreover, the test itself appears to be consistent with the South Texas decision (although broader than its holding) insofar as that decision enunciated concern over the conduct of licensees (e.g., violations of .licenses, misstatements, etc.).

In short implicit in the grant of a license is the principle that an applicant will act in conformity with the law. When applicants misuse licenses, as Florida Cities'llege is the case here, they forfeit whatever rights they may have had vis-a-vis the public.

(1/ con'. from preceding page) must be taken as such, FP &L' defenses also represent averments and cannot be given credence without hearing.

1/ The corollary proposition .is that administrative agencies having any discretionary'uthority are bound to exercise'their- judgments in light of existing national .law and policy. Office of Communica-of the United Church of Christ. v. FCC, 425 F.2d 543 (1969);

Southern Steamshi Co. v. NLRB, 316 U.S. 31 (1942); and see Gulf States Utilities Co. v. FPC, 411 U.S. 747. (1973). This is especially so where one subject to the authority of an administrative agency is obtaining valuable public rights. FPC v. Idaho Power Co.,

344 U.S. 17 (1952); Idaho v. FPC, 346 F.2d 956 (9th Cir., 1965).

An applicant has no vested interest in being able to violate the law.

Res ectfull, sub itted, o ert A. Jablon David A. Giacalone Attorneys for Florida Cities

CERTIFICATE OF SERVICE I hereby certify that I have this day caused the foregoing Supplemental Brief of Florida Cities to be served upon the following persons:

William C. Wise, Esq. Linda L. Hodge, Esq.

Robert Weinberg, Esq. Lowenstein, Newman, Reis Suite 200 & Axelrad 1019 19th Street, N.W. 1025 Connecticut Avenue, N.W.

Washington, D.C. 20036 Washington, D.C. 20036 William H. Chandler, Esq. Lee Scott Dewey, Esq.

Chandler, O'Neal, Avera, Gray, Office of Executive Legal Lang & Stripling .Director P.O. Drawer 0 Nuclear Regulatory Commission Gainesville, Florida 32601 Washington, D.C. 20555 David A. Leckie, Esq. Chief, Docketing and Service Antitrust Division Section Department of Justice Office of the Secretary 1101 Pennsylvania Avenue, N.W. Nuclear Regulatory Commission Washington, D.C. 20530 Washington, D.C. 20555 Robert H. Culp, Esq. Ivan W. Smith, Esq.

Lowenstein, Newman, Reis Atomic Sa fety & Licensing

& Axelrad Board Panel 1025 Connecticut Avenue, N.W. Nuclear Regulatory Commission Washington, D.C. 20036 Washington, D.C. 20555 Tracy Danese, Esq. John M. Frysiak, Esq.

Vice President, Public Affairs Atomic Safety & Licensing Florida Power & Light Company Board Panel P.O. Box 013100 Nuclear Regulatory Commission Miami, Florida 33101 Washington, D.C. 20555 John E. Mathews, Jr., Esq. Robert M. Lazo, Esq.

Mathews, Osborne, Ehrlich, Atomic Safety & Licensing McNatt, Gobelman & Cobb Board Panel 1500 American Heritage Life Bldg. Nuclear Regulatory Commission Jacksonville, Florida 32202 Washington, D.C. 20555 J. A. Bouk night, Jr., Esq.

Lowenstein, Newman, Reis

& Axelrad 1025 Connecticut Avenue, N.W.,

Washington,'.C.'0036 1

P Dated at Washington, D.C. this 29th day of June, 1977.

avid A. Giacalone